INCOTERMS – INTERNATIONAL COMMERCIAL TERMS
What are Incoterms?
The word Incoterms stands for International Commercial Terms. These are standard terms of sellers’ delivery responsibilities and risks. Before considering shipping merchandise internationally, an important question must be answered: At which point are the risks and charges transferred to the buyer?
In 1936, for the first time, the International Chamber of Commerce (ICC), located in Paris, published under the name of Incoterms 1936, a series of international rules that answers this question.
In order to adapt these rules into the most recent international trade practices, many amendments have been added to the rules of 1936 accomplishing what today is called “Incoterms 2010” which has replaced Incoterms 2000. The last modifications are valid from January 1st 2011 and will mainly eliminate four Incoterms – DEQ, DES, DAF and DDU – and introduce two new Incoterms “D”, DAT (Delivered at Terminal) and DAP (Delivered at Place of Destination).
Why are Incoterms Important?
Incoterms include several standardized terms for a contract between international sellers and buyers of goods, which enables the contract to become concise between the seller and buyer of goods. Sellers and buyers seldom reflect on the choice of an Incoterms rule for every transaction. Normally, the choice is determined by their business strategy. As noted, the choice of the maritime terms in most cases depends on the type of the cargo and the buyer’s intention to sell the goods in transit. Here, the choice between any of the F-terms rather than the C-terms depends on the ability of sellers and buyers to obtain the most favourable contract of carriage. Please contact TEU Global for more details free of cost.
Difference Between Incoterms CFR, FAS, FOB, EXW, Etc.
These and other Incoterms mentioned below are classifications according to the increasing level of seller’s obligations. The description in front of each term specifies the responsibility of the seller, hence all costs up to the mentioned place is the seller’s responsibility, for which the prices are agreed by both parties. Buyers and sellers choose and agree on the term that best suits them, depending on their own relationships and experiences with their logistics partners. Please contact TEU Global for determining which of these terms is the most beneficial for you as our client.
What is an International freight forwarder?
A well established freight forwarder is experienced in all modes of transportation – road, rail, air and sea. It provides cost-effective and efficient cargo shipping solutions based on the customer’s requirement that includes processing all relevant shipping documents, and arranges the distribution or “forwarding” of the cargo as per the instructions of their client. It is familiar with all relevant border cargo movements.
Freight Forwarder vs Customs Broker: What's the Difference?
Freight forwarders are defined as experts connected within the supply chain who concentrate on the logistics and physical transportation of cargo. They are in touch with any entity in the exporting process who handles or is aware of a shipment moving via truck, boat, plane or a combination thereof. Freight forwarders are in charge of assembling and completing a variety of documentation and compliance filings.
A customs broker is a specific term used to identify the intermediary between the importer and the government’s customs department in the country of import. According to the Department of Homeland Security, a customs broker is defined as a private individual, partnership, association or corporation licensed, regulated and empowered by U.S. Customs and Border Protection (CBP) to assist importers and exporters in meeting U.S. government requirements governing imports and exports.
Brokers submit necessary information and appropriate payments to CBP on behalf of their clients and charge them a fee for this service. They must have expertise in the entry procedures, admissibility requirements, classification, valuation, and the rates of duty and applicable taxes and fees for imported merchandise.
What is a Clearing or Customs Clearing Agent?
A clearing or customs clearing agent is a firm or company that has the accreditation and skills to take care of the customs clearance aspect of the business. Every country has its own regulatory customs requirements. It has knowledge about HS Codes and calculations of Duties and Taxes and to present all complete relevant documents at customs. A good clearing agent will be able to get customs clearance with maximum possible speed and efficiency, avoiding all penalties for delayed, incomplete and inaccurately filled documentation.
What is a Customs Import Bond?
A Customs Import Bond is a financial guarantee between the Insurance/Surety Company issuing the Customs Bond, Importer of Record, and Customs & Border Protection (CBP). Per regulations, CBP requires all importers to file an Activity Code 1 – Import Bond in order to clear their entries, even if the goods are duty free. The Customs Import Bond guarantees CBP will collect all import duties, taxes, fines, or penalties from the importer. If the importer cannot pay, the Insurance/Surety Company who issued the bond will reconcile remaining costs. An importer may only have one Continuous Import Bond on file with CBP at a time. Learn more about the different types of Customs bonds.
Is this the same Continuous Bond I already have?
Customs Bonds are issued in a standardized format according to CBP regulations. All authorized issuers of continuous Customs Bonds employ the same bond format, parameters, conditions, and coverages. Anyone authorized to clear entries on behalf of the importer will be able to access the bond filed with TEU.
The only difference in purchasing a bond from one issuer to another is the strength of the insurance company issuing the policy. TEU issues Customs Bonds directly from insurance companies with very high S&P ratings which have been operating well over 100 years. This ensures dependable financial support to all Customs bonds issued by TEU.
How is my Customs Import Bond used?
A Continuous Import Bond is good at any U.S. port and can be used by any Customs Broker or Freight Forwarder to clear entries.
When a bond is placed CBP issues it a unique bond number, tying the bond to the company’s Importer Number/Tax ID.
The Customs Broker or Freight Forwarder files the import documents, providing the bond number upon entry. The Continuous Import Bond remains on file as a policy of the surety and there is no ownership of the bond by a third party, regardless of where the bond is purchased.
When will a Customs Bond renew?
Usually, Customs continuous bond renews on yearly bases.
How do I apply for a U.S. Customs Bond?
The application process for a Customs Bond with TEU is simple. All TEU requires is an officer of the company to fill out and sign a one-page application and a power of attorney form. From that point, TEU’s underwriting team will evaluate the account and may request additional documentation for approval.
Once approved, the bond will be filed with CBP prior to the current bond’s effective date (if a bond for the previous year was already in place). The bond’s new effective date will remain unchanged, ensuring there will be no lapse in coverage. TEU issues the Customs bond in accordance with CBP requirements and will promptly deal with any necessary changes at no additional charge.
What is "Importer Security Filing 10+2" and how does it affect me?
The Importer Security Filing (ISF) regulation requires submission of an electronic ISF to U.S. Customs (10 data elements by importers, plus 2 by carriers) 24 hours before shipment loading. Enforcement of the regulation, which began January 26, 2010, may result in stiff penalties for non-compliance ($5,000 per incident, plus cargo delays). TEU offers integrated ISF services to ensure you meet the new requirements and that your shipments arrive on time, without delay.
BILL OF LANDING
What is a Bill of Lading?
A bill of lading (BL or BoL) is a legal document issued by a carrier (Ocean Vessel, airplane, Trucking Company) to a shipper (the one sending the goods). BL details the type, quantity, destination and consignee (the one who is authorized to receive) of the goods being carried, and also serves as a shipment receipt when the carrier delivers the goods at a predetermined destination. A copy of this document stays with the shipper, another is sent to the consignee and yet another must accompany the shipped products, no matter the form of transportation, and must be signed by an authorized representative from the carrier, shipper, and receiver.
What is the difference between Master Bill of Lading and House Bill of Lading?
After receiving the cargo, a Master bill of lading (MBL) is issued by the carrier (Ocean Vessel, airplane, Trucking Company), whereas a House Bill of Lading (HBL) is issued by the Freight Forwarder. Whether HBL or MBL is required by the shipper, depends on the shipper’s arrangement with the consignee, freight forwarder, and the banks in the exporting and importing countries.
VERIFIED GROSS MASS
What is Verified Gross Mass & Who Provides it?
Misdeclaration of cargo weight is a major hazard which often results in cargo claims, structural damages to vessels and also poses a significant risk to the lives of staff. The International Maritime Organization (IMO) has amended the SOLAS (Safety of Life at Sea) convention that mandates the declaration of the Verified Gross Mass (VGM) of a packed container before loading on board vessels within a prescribed cut-off date / time to the shipping line and / or port terminal authorities. The regulation stipulates that either the container is weighed after it has been completely packed and sealed. Or all packages and cargo items may be weighed individually (including the mass of pallets, dunnage and other packing and securing material) and must be added to the tare of the container visible on the exterior of the container.
How long does international shipping take?
The transit time of an ocean shipment depends on the port of departure and the port of arrival. Vessel sailings are regularly scheduled, and we can always provide you with the estimated dates of departure and arrival of our next vessels.
What is containerized shipping?
Containerized shipping is a very common method for expediting the movement of household goods and commercial products. Your commercial products or household goods are loaded into a protective steel container similar to a semi-truck trailer (without wheels). The container is loaded onto an ocean-going vessel. Upon arrival, the container can be loaded onto a trailer for delivery to your final destination.
How much does a container hold?
Standard containers come in two sizes: 20-foot and 40-foot in length. The 20-foot container can hold approximately 1050 cubic feet (the contents of a one-bedroom apartment). The 40′ container can hold approximately 2100 cubic feet. Specialized containers (hi-cube, refrigerated, open-top, etc.) are also available. Please contact us for more details and how we can serve you.
What do I need to do to prepare my product or household goods?
All household goods should be securely packed in corrugated cardboard boxes. All commercial products should be securely packed in corrugated cardboard boxes and/or palletized. A container will be delivered to your location. Upon completion of loading, the container will be sealed and delivered to the US loading port.
What does "less than container load" mean?
“Less than container load” is a shipping term referring to the quantity of personal effects or commercial product being shipped that would not be enough to fill a standard 20-foot ocean shipping container.
What if I need my shipment sooner?
TEU Global offers alternatives to coincide with both your schedule and your budget. Air shipments will generally arrive to their destination within one week of the cargo pickup or delivery.
Do I need marine insurance for overseas shipments?
It is always advisable to get overseas shipments insured. TEU Global will obtain the most suitable marine insurance coverage for your shipments upon request. Due to the low cost of marine insurance, TEU recommends obtaining All Risk coverage.
Will there be other charges due at the destination port?
Apart from duties and taxes, there will be port handling charges upon arrival at the destination port. These charges cover terminal handling/off-loading and documentation fees for your shipments. TEU can provide you with contact information for clearing agents at each destination to prepare you with this information ahead of time.
How do I handle shipments sold on the water?
The ISF will need to be updated if the shipment is sold in transit. At a minimum, the ISF importer must notify CBP that the goods have been sold, and the party must update the Buyer (Owner) field and any other field that the party knows has changed as a result of the sale. Deleting the original ISF and replacing it with a new ISF while the shipment is on the water will expose the ISF importer to liquidated damages for a late filing. It is best to update the original ISF with the new information. The ISF importer remains liable for the timing and accuracy of the ISF filing.
IMPORT AND EXPORT
How can I know that I must have export/import license for shipment?
For exporter: A licence is not required to export goods from USA; however, a permit is required for some goods. The export of goods from USA is controlled by laws and Government policies to prohibit the export of certain goods either absolutely or conditionally, and adequately record USA’s international trade.
Total prohibition applies to the export of protected wildlife, some heritage items, selected weapons and other dangerous goods. Goods that are conditionally prohibited from export may not be exported unless all necessary export permits are obtained from the relevant permit issuing agency/agencies.
For importer: Whilst there is no general licence required for importing into USA, US CBP will need to clear your goods on import. You’ll need to know what import permits, quarantine permits, and treatments apply to your specific category and type of imported goods, and and whether they are subject to mandatory safety or information standards.
If you don’t follow the correct steps and regulations, you will risk breaking the law and not receiving your imports.
Do I need Certificate of Origin?
A Certificate of Origin is often required to export certain goods, for customs clearance at the port of delivery and as stipulated in a letter of credit.
The Certificate of Origin is used for customs clearance at the destination. Certificates of Origin can also be requested by the overseas buyer or the business receiving your goods and in some instance the company receiving the goods will require a Certificate of Origin before authorizing their bank to issue a letter of credit and thus payment. In accordance with some free trade agreements, Certificates of Origin are required as part of the application for preferential tariffs.
What is the difference between Shipper Letter of Instruction and Forwarding Instruction for export shipment?
A Shipper’s Letter of Instruction (SLI) is an important legal document/contract created between the shipper and the freight forwarder that is organizing the export and logistics for your shipment. It is a detailed document used in import/export and International trade to provide all details relating to your export shipment. A Forwarding Instruction is a similar document that the shipper completes and sends directly to the shipping line if they are not dealing with a freight forwarder. The SLI is a detailed document which gives your freight forwarder all specific instructions relating to the export of your goods. The freight forwarder will use the Shipper’s Letter of Instruction to correctly arrange the transport of your cargo.
What documents are required to export my household goods or commercial product?
While itemization is not required for household goods, it is recommended that a general list with item valuation be provided. Packing lists showing unit quantities and value are needed for commercial product shipments. The above documents are needed to expedite export clearance and will be returned upon completion of the U.S. Customs export clearance verification.
DUTIES AND TAXES
Will duties and sales tax apply upon entering my household goods or commercial product into a foreign country?
This depends on the destination country, your residence status and employment status. TEU recommends contacting the embassy commercial office for the country of destination for current rate information. We can also refer you to a shipping agent at your destination to prepare you for the importing process.
FAQs ABOUT TEU GLOBAL SERVICES
Can TEU Global arrange for shipments to be picked up from our factory/warehouse?
Yes, we can facilitate door-to-door pickup and delivery, to and from anywhere in the world. Please contact us and we will be happy to provide you our best rates and range of logistics services.
What are the qualifications of TEU Global USA, Inc?
TEU Global is a licensed international freight forwarder and Customs broker. We are licensed by the Federal Maritime Commission, a United States Government agency. TEU is also a licensed Non-Vessel Operating Common Carrier (NVOCC), which enables us to offer bulk shipping prices to all our clients regardless of your shipping volume.
Will TEU deliver my cargo to me once it reaches its destination?
Yes, TEU handles upon arrival, local Customs clearance, local port charges, and import documentation. TEU also provide additional services at your request, including delivery of cargo to your final destination. Even before booking a shipment, we recommend contacting us to ensure you are prepared for your shipment’s arrival.
We are a supplier and our customer require us to use TEU. How should we proceed?
Please contact 732-515-9040 or email at email@example.com for more information.
What are the contact details of your Headquarters?
Trade Expeditors USA, Inc. DBA TEU Global
242 Old New Brunswick Road, Suite 145,
Piscataway NJ 08854
Main: 732 515 9040 | Fax: 732 856 5008